Seattle Condo Review: Blog with News & Advice about Seattle Condos

Seattle Condo Market Update

The April numbers are in and there's good news and bad news.  Let's start with the bad news.

• For the first time in a long time, median prices in Belltown dropped.  If you remember my last update in March, we saw median prices rise over 13% versus March 2007.  In April, we saw median prices drop by 7%.  We'll have to see how the next few months play out to determine if this is the adjustment we've all been waiting for so that buyers on the sidelines can come back in or if prices drop further.

The good news:

• April over Apil inventory (April 2008 as a proportion of April 2007 inventory) has come down compared to March over March numbers.  In March, Belltown inventory was 51% higher than March of 2007.  In April, Belltown inventory was 41% higher than April of 2007.  If this trend continues, it would suggest that there while we are certainly seeing more units on the market than last year, there does appear to be a ceiling in terms of how much more supply is entering the market and as a result (all else equal), we will have a floor on how low prices will ultimately go. 

The Standoff Continues as Sellers Refuse to Roll

Here's a good article in the Seattle Times describing "sticky pricing" and the fact that Seattle sellers are largely refusing to make giant price reductions -- even as most buyers refuse to pay 2007 prices. 

As most SCR readers know, I happen to believe that we are more likely to be in a balanced market by the end of this year than an all-out buyers' market.  In fact, it seems to me that the biggest factor will be if the rest of the country's economic jitters drag Seattle down since the local fundamentals (job growth, interstate immigration, foreign investment / weak dollar, baby boomer downsizing, etc.) bode well for demand keeping up with the supply.

Of course, I suppose I'd be retired in the south of France if predicting prices were easy and can see why others feel prices will drop further.  There certainly is no shortgage of lively discussion -- if you didn't see it, check out a recent SCR reader exchange here.   

-Wendy

Seattle Condo Market update

Spring is here so let's see how the numbers are looking.  For the month of March, inventory remains high in Seattle at 52.43% compared to same time last year.  Year-over-year pending sales dropped 27.76%. In fact, from January to March 08, we have seen a consistent drop in closed sales over the same time last year.  However, in March, median price for Seattle condos increased by 4.11%. 

Days on market remains longer than same time last year for all the neighborhoods.  Months of inventory in Belltown/downtown has recovered from early this year.  In January, Feburary and March, the months inventory has been shrinking from 14, to 8.3 to 7.6.  It looks like we are moving from a buyers' market gradually to a balanced market in Belltown/downtown.  Kudos to those buyers who picked up great deals in January.

Summary: More property is on the market and staying on the market longer than last year; however, sellers are not slashing prices nearly as much as some had expected.  Most homebuyers are taking a little bit longer to decide on their purchase knowing that there is not as much urgency.  Sellers on the other hand are still holding on to the prices they believe their condos ought to command and in some cases are making a symbolic reductions in the price but rarely more than 10%.  For the sellers who can wait, they are opting to rent out their condo to capitalize on the strong rental market.

Flashback: I was curious how many readers were right about their prediction on the market for March 08 compared to Fall 2007?  22% of SCR voters were right that the market will perform the same in March (~5% change in median price) compared to September 07 but sell at a slower rate.  About half of the poll takers incorrectly predicted in October that the pricing in the spring would drop by up to 30%.

-Wendy

Tower Spacing News

A lot has been discussed regarding the unpleasant tower spacing between Cosmopolitan and 1918 8th Ave. Kiro 7 News will be featuring an investigative report about problems with Seattle's urban density. This program may enlighten those who are thinking abour purchasing a highrise condo in the dense downtown area. The program is scheduled to air on Monday, March 3, at 6.00pm.

Read more on Cosmo Seattle and Seattle PI.

-Wendy

Western and Blanchard: Reader Survey Results

We had quite a handful of readers participating in the Western and Blanchard survey. Here are some highlights and key takeaways from the results. __________________________________________

Summary:

1. Close to 2/3 of the participants feel that there are too many planned amenities for this project. I wonder if they are more concerned about higher dues that are associated with more amenities or they simply do not need them.
2. Not surprisingly, 58% of the participants find that the location is a major selling point. It is really hard to argue about the location when it is only a couple of blocks from Pike Place Market.
3. 65% feel that a finger print scanner at the front entrance is a neat feature but not important to them.
4. 40% feel that the reputation of the developers is extremely important to them. With all the reports about leaky condos and delays in construction, I would have imagined more homebuyers would find that as a major consideration.
5. Out of the various green features (green roof, solar powered common are lighting, high efficient heating and recycled builidng materials), 64% picked high efficient heating.
6. Half of the participants are willing to pay $10,000 for air-conditioning in their unit.   

For full survey results, click here.

-Wendy

The White House and Your House

The mortgage and economy seem to be front and center for the Presidential candidates these days. Here are some tidbits I found from the frontrunners' websites regarding the mortgage situation and what they'd do about it.

__________________________________

Democrats:

• Barack Obama: Combat Mortgage Fraud and Subprime Loans; Create Fund to Help Homeowners Avoid Foreclosures; Create a Credit Card Rating System to Improve Disclosure; Establish a Credit Card Bill of Rights to Protect Consumers.  (If you're fired up for Obama, there's a unity march in downtown Seattle this Saturday.)
• Hillary Clinton: Foreclosure Moratorium; Freeze Interest Rates; Require Accountability.

Republicans:

• John McCain: Cut Taxes; Cut Spending.
• Mit Romney: Cut Taxes; Cut Spending; Government Guarantees For Larger Loans;  More Disclosure and Counseling for Consumers.

I'm curious what readers think about these candidates' plans? In my opinion, the government's job is to help consumers make decisions with as much info as possible but people who get irresponsible loans for flipping shouldn't really get bailed out.

-Wendy

Escala receiving 22 Real Estate Awards

Escala announced recently that they have been selected to receive 22 real estate awards on February 13 from the National Association of Home Builders. Here is a list of the awards. Read more here.

Top Honors

Attached Community of the Year (Urban)
Best Attached Home Plan – Condo or High-Rise Residence
Sales Team of the Year

Regional Awards

Best Graphic Continuity
Best Brochure for a Community Priced Over $1 Million
Best Direct Mail
Best Black & White Advertisement
Best Color Ad for a Single Project
Best Radio Commercial
Best Television Commercial
Best Overall Ad Campaign
Best Special Promotion
Best Signage
Best Interior Merchandising of a Model Priced Over $2 Million

Silver Awards

Best Graphic Continuity
Best Brochure for a Community Priced Over $1 Million
Best Color Ad for a Single Project
Best Overall Ad Campaign
Best Website for a Community
Best Signage
Best Attached Home Plan – Condo or High-Rise Residence

Individual & Council Awards

Marketing Director of the Year

The Vine and Fifteen Twenty-One were also the winner for "Attached Community of the Year" in 2003 and 2006 respectively.

-Wendy

Leaky Condos...nope, not Fake Stucco

Matt has a interesting post on an acid leak in the Trace Lofts garage (albeit, residents were warned the ongoing construction would require people to park at their own risk). Around the same time, a homebuyer commented that 5th and Madison had broken water pipes on the 2nd and 3rd floor. While helping a friend to move into his Mosler lofts home, one of my clients saw wood floors being ripped up in the townhome units and big drying blowers were brought in to dry off the floor. Apparently, there were some water issue in the units.

Having a few leaks isn't a huge deal, no new building is flawless which is why we have construction warranties and typically the first year of any new building includes a good amount of repair work.  The bigger question is to what extent are these the beginnings of a more issues for Trace, Mosler, or 5th/Madison?  We'll have to wait and see.  At the very least, it's probably another reason to consider the developers' warranties when comparing projects. 

-Wendy

Quick Review of the Seattle Condo Market in 2007

Five things we now know that we didn't know before the end of 2007.

1.)  The housing crash did not happen in Seattle despite constant media reports, bearish pundets, and market crises in most other regions of the US throughout 2006.

2.)  It is possible for one of the nation's top mortgage companies, American Home Mortgage, to stop funding approved loans leaving some homebuyers unpleasantly surprised at their closing appointments.

3.)  In Seattle, the biggest portion of new construction inventory, approximately 3500 units is proposed for 2010. However, these inventories may not all come through.

4.)  Homebuyers care deeply and intensely about how developers communicate with them on the delays for their condo and aren't afraid to blog, post, and comment about it. Some of those developers and marketers will probably get more skepticism on their future projects.

5.)  Most buyers went into wait and see mode in late 2007 and, for the most part, sellers didn't budge, took their properties off the market, or made symbolic price reductions.

Five things we suspected were true in 2007 but now we know for sure.

1.)  Seattle strong job growth is keeping the demand up.

2.)  Retiree (65 and above) and baby boomers formed the largest group of home buyers for new condo projects in downtown Seattle.

3.)  There is material demand for previously untested hotel/condo combo projects in the Seattle market.

4.)  Apartment-to-condo conversions decreased the supply of rentals and local job growth pushed up previously stable rental prices. 

5.)  The days of easy double digit appreciation and speculative flipping are over (at least for the next few years).

Five things we need to know as soon as possible if we want to know what is going to happen for Seattle condo market in the long term.

1.)  Will buyers re-enter the market in the first quarter of 2008 or will they continue to wait and see?

2.)  Will sellers continue their relative discipline and patience or will they start a price race to the bottom?

3.)  Will Seattle's employers maintain their growth or will they be affected by slower economic growth as seen in other regions in the country?

4.)  Will rental properties raise rents enough to make waiting less attractive than buying?

5.)  Will the sub-prime mortgage mess spread to the rest of the mortgage industry?

-Wendy

Condo Purchase Post Mortem Analysis

In a recent post, we looked at three projects completed last year and how closely the developers delivered on what they promised. Nothing beats hearing first-hand experience from homeowners who actually bought into these condos. I interviewed three buyers and summarized their responses below.

Two of these homeowners were represented by me and one is an SCR reader for whom I worked on a different subsequent property. If buying a pre-sale condo as your primary residence is one of your New Year's resolutions, you may want to get some insights from some folks who preceded you in the Seattle condo market.

Mosler Lofts

1.) What sold you on this condo?
    
Primarily the location but also the price per square foot and the particular unit available.

2.) How closely did the developer deliver (concept, compared to the rendering, architectural design, model unit versus your unit, overall finishes etc.)
         
Very accurate on the concept. Did not review a model unit but floor plan was pretty close to the actual.

3.) How was the overall buying process for you?
         
Unsatisfactory delays and poor communication by developer and developer's agent.

4.) Do you have any advice for first time new construction buyers?
          
Review the developer's track record and also the developer's agent. Negotiate upfront remedies for delays and/or be prepared for them.

Belltown Recovery?

It's still very early but I noticed there was a slight uptick in activity in the core Belltown resale market in December. 

In November, there were only two 2BR units in the $400-600K range in Belltown that went from Active to Contingent. In December, there were four units that went from Active to Contingent status (note: Decembers are historically a slower month than Novembers).

Perhaps this is an early indicator that some buyers, who seemed to be price inelastic over the last few months, are starting to pull the trigger once again. 

Stay tuned.

-Wendy

Sales Center Visit Experience

Most buyers focus on the location, building, amenities, and unit floorplans when considering a new condo purchase. What many have learned is that finding out the information you need can be made much easier (or more difficult) based on how well the sales center is organized and managed.

Did you feel wowed, pampered, and delighted by one particular sales center? Share your feedback and vote for your favorite sales center (even if you didn't end up buying, you're welcome to recognize a particularly satisfying visit).

-Wendy

Survey Summary: Seattle's Best Looking New Project

The results are in from the latest SCR poll: best looking new project in Seattle. The top choices were AVA and 1521. 

-Wendy

Seattle's Best Looking New project

Fifteen Twenty One               Escala                             AVA

        1 Hotel                        Olive 8                      Four Seasons

 

SCR Reader Poll: Will it be a happy Spring 2008?

Condo Investments - Not for the Faint of Heart

A lot of my clients are experienced investors. However, I also work with first-time investors as well. For those folks who aren't planning on using their new property as a primary residence and haven't bought and sold investment properties before, there are some things I generally go over before we even consider touring the first unit: 

• Buying a property for zero down and renting it out expecting you'll make a monthly income after dues, taxes, and expenses is highly unlikely to happen. Perhaps you can find a really under priced dated unit and are able to do the renovations yourself but in general, investors experience short term losses and reap their profits in the medium to long term at selling time. 
• Especially if it's primarily an investment property, buying a pricey unit today that is in a hot building may not leave a lot of head room for appreciation a few years out. Consider units that are attractively priced and/or in areas that are still developing (and priced accordingly).
• Run the numbers. Make sure you whip out your Excel and see what your monthly costs, taxes, and expected resale value will be to see if the figures pencil out. If the numbers don't work out on paper, they probably won't in real life either.

Hope this helps!

-About Wendy

Seattle Real Estate Update

According to data released by Dupre + Scott to the Seattle PI, a typical Seattle rental house now costs $1,604 a month, up 4.6% from a year ago. In general, the trend is similar to that for apartments. Apartment-to-condo conversions decreased the supply of rentals and an increase in local job growth are some of the reasons for the increase in rental prices. Read more.

Seattle Mayor Greg Nickels has plans for a $300 million “Civic Square” that will include a 32-story condo and office high-rise. Read more.

(Update 03/28/2008 :Civic Square will feature an open plaza with an amphitheater, water features, retail space, a Metro/Light Rail station and a 40-story office & residential tower. The curved lower 22-levels will house office space and the upper 17-levels will be condominium homes.)

-Wendy

Technorati Tags: Seattle condos, Seattle real estate news, Downtown Seattle condos, Civic Square development, Condos in Seattle

New construction's impact on existing resale pricing

How are all the new pre-sale projects impacting existing resale condos? I recently posted a poll and more than half of voters felt that the new construction is only going to increase the resale units’ prices; approximately 35% of the voters felt that it will have a negative impact on the resale unit, and with  9.2% felt that it is not going to have any impact.

Feel free to participate in the latest SCR poll on the right hand side of this page and vote for the most attractive architecture of all the Belltown/ downtown condos.

-Wendy

Technorati Tags: presale value, resale value, new construction condo, resale condo, investment talk, market opinion, seattle condo market, avenue one

Best looking Condo in Seattle?

Just added a new poll to see what SCR readers think is the best looking condo in Seattle.  Vote for your favorite now (the poll is on the right hand side of this page).

-Wendy

Rent a condo or hotel?

A 900 Sqft 2BR in new condo PARC and a 750 Sqft 1BR in new fancy hotel/condo OLIVE 8 cost about the same to purchase. Which one do you think will command higher rent?

The concept of a hotel/condo is fairly new in Seattle and some investors wonder if they would be better off going with a classic condo or hotel/condo hybrid given that you can get a bigger classic condo for the same price as a smaller hotel/condo – not to mention lower dues.

Currently, there is not enough data to test the market response on condo/hotel rentals so I posted a poll to ask readers which type of residential living they think will command a higher rent, a classic condo or hotel/condo hybrid. I used a 2BR in The Parc in Belltown and 1BR in Olive 8 as an example.

The result was quite interesting. 62% of the readers believe that a one bedroom in Olive 8 will command a higher rent.

-Wendy

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Technorati Tags: Rent apartment, The Parc, Olive 8, condo rental, condo hotel rental, rental investment, investment talk, Belltown condos, downtown condos

Love versus numbers

We know hotel/condo living is still fairly new in Seattle. However, it has been receiving a relatively good response from the market. I was curious to get some more perspective on how home buyers view this type of residential living. I had a chance to chat with Armen, who bought a unit in a hotel/condo recently. Here are some of his replies to questions that I asked him.

1.) What made you pick a hotel/condo over a condo?

Very convenient, I love the fact that you can order in at 2 in the morning and go down to the  gym without driving!

2.) How did you pick the between the different hotel/condos?

I always enjoyed working with Williams Marketing staff (Javilla especially) and got an invitation from their site for a presale offer.

3.) How was your experience in the sales center?

Sales center was awesome; Diane, Carrie and Pamela are awesome!

4.) When you were picking the unit, what were you looking for?

I really didn't put much thought into it, my friends and I decided to get two bedrooms, to have more square footage!

5.) If you were to do it all over again, what would you have done differently?

Nothing, really!

6.) Anything else that you would like to share with SCR readers?

You have to LOVE the project you are buying, otherwise the price will never make sense!

Armen’s last answer highlights an interesting point. Essentially, he seems to be pointing out that price per square foot is not really the key pricing driver. I’m curious to hear how SCR readers feel about Armen’s “ Love” test versus a more by “ the numbers approach.”

-Wendy

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Technorati Tags: Hotel/condo, Home buying, investment talk